Ciena to Improve Connectivity in Iceland

NEW YORK, January 17, 2013 /PRNewswire/ --

Ciena has announced a collaborative project with Farice to upgrade DANICE, the submarine cable system connecting Iceland and Denmark. After a lackluster performance back in 2012, will this new project help the company find its way back on track?

In order to support Iceland's rapidly growing data center industry, Ciena Corporation (NASDAQ: CIEN) [Full Research Report](1) and Farice have jointly announced to upgrade DANICE, the submarine cable system that connects Iceland and Denmark. The aim is to provide stronger and faster connectivity between Iceland's submarine and terrestrial networks, reducing operation costs and capital expenditures. The upgrade is due to be operational in early 2013.

The Perfect Home for Data

In the recent years, Iceland has been a great option for foreign enterprises and operators who are in search of a location where they can establish data centers. Having a well-educated workforce and also having a variety of options for renewable energy sources has made Iceland an ideal location for secondary data centers. Furthermore, Iceland's cool climate reduces cooling costs. But due to heavy traffic in the network, the European continent eventually experienced problems having sufficient bandwidth to support their operations. This is why Ciena and Farice have partnered to upgrade the DANICE submarine cable to four fiber pairs, giving it a maximum capacity of 35.2 Tb/s, compared to its current total capacity of 8.8 Tb/s.

Farice, the main provider of international capacity from Iceland to mainland Europe, is tasked to optimize the cable landing station design of Ciena's GeoMesh networking solution. Farice has chosen Ciena's 6500 Packet-Optical Platform to provide high-bandwidth connectivity between Landeyjar, Iceland and Blaabjerg, Denmark. The network will use Ciena's 40G coherent transport technology, with long distance 100G wavelengths - managed by Ciena's OneControl Unified Management System.

A Recovery Ahead

Ciena is hoping that its new project will help the company recover from disappointing revenue results and its reported net losses in the fourth quarter of 2012. They reported a net loss of $38.77 million or $0.39 per share, a larger loss compared to the $22.33 million or $0.23 per share in the same quarter of 2011. For the first fiscal quarter of 2013, Ciena estimates revenue of around $435 million to $460 million, while analysts forecast revenue of almost $469 million.

Recent developments have shown that the company is trending above its moving average of $14.72. Ciena is up 3.68% at $15.23 in recent trading. It has a volume of 6.62 million compared to its average volume of 3.60 million. If Ciena can maintain that trend, then this stock may reach or even exceed its recent high of $16.72.

As Ciena continues to work on new and exciting projects like the DANICE upgrade, the company must innovate and maintain its current technological advantage. The company must work on increasing its profitability to maintain or even improve the recent performance of its stock. But things are looking good for the company, as analysts expect the company to recover this year, estimating that the stock is undervalued by at least 25%.

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